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Why I would buy Xero (ASX:XRO) and this ASX tech share

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One area of the market which I think is a great place to look for investment ideas is the tech sector.

At this side of the market there are a good number of shares which have the potential to generate strong returns for investors over the next 10 years.

Two ASX tech shares that I think investors should take a look at are listed below:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a provider of enterprise mobility software which helps sales and service organisations to increase their sales win rates and improve customer satisfaction. This is achieved through improved mobile worker productivity. It was a very strong performer in FY 2020, delivering a 53% increase in annualised recurring revenue (ARR) growth to $35.8 million.

More of the same is expected in FY 2021, with management guiding to ARR growth of 36.9% to 48% year on year. This is still only a fraction of its overall market opportunity. Management expects the sales engagement platform market to be worth $6 billion a year by 2021.

Xero Limited (ASX: XRO)

Another high quality ASX tech share to buy is Xero. Over the last few years Xero has evolved from being a cloud-based accounting solution to a full service small to medium sized business solution. Unsurprisingly, this has gone down well with small businesses across the globe, leading to stellar subscriber growth over the last few years.

At the last count the company had almost 2.5 million subscribers using its platform. While this is certainly a large number, it is still only scratching at the surface of its overall market opportunity. In fact, management notes that less than 20% of its global English-speaking target market is using cloud-based accounting software currently. I believe more and more will start embracing the new technology in the coming years. And given the quality of Xero’s platform, I suspect it will be very well-positioned to benefit from this shift.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended BIGTINCAN FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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